Nuclear:

Was Southern California Edison’s recent decision to close its San Onofre generating station a responsible move by the utility? During today's OnPoint, Scott Peterson, senior vice president for communications at the Nuclear Energy Institute, discusses the fallout from SCE's decision and its impact on the industry more broadly. He also weighs in on the Senate's progress to confirm Allison Macfarlane as chairwoman of the Nuclear Regulatory Commission.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Scott Peterson, senior vice president for communications at the Nuclear Energy Institute. Scott, it's nice to see you again.

Scott Peterson: It's a pleasure to be here, Monica.

Monica Trauzzi: Scott, let's start off by talking about the battle in the Senate EPW Committee right now over Allison McFarlane's NRC confirmation. Chairwoman Boxer has requested a series of documents before moving the committee forward with a vote. There's a lot of back and forth on this one between Republicans and Democrats. Is it a reasonable request by Boxer and does she have the right to these documents that she's requested?

Scott Peterson: Well, clearly, she has the right to the documents and to understand what the process has been at the NRC over the San Onofre reactors. But we believe that should be a separate issue from the qualifications of Allison McFarlane to be the chairman of the NRC, or to continue to be the chairman of the NRC for a full term. So we would prefer that that confirmation move forward. We support the re-nomination of Chairman McFarlane in that position. So we believe that the two things should be de-linked.

Monica Trauzzi: But Boxer says that she was promised these documents during the hearing with McFarlane.

Scott Peterson: That's true, but it takes a while to pull together 70,000 documents. It doesn't happen overnight. And if the commitment is there to provide the information to the Senator, I believe the NRC has a good record of providing information, of being transparent to stakeholders that are involved, and most particularly the U.S. Senate. So clearly, the oversight role is there on the part of the committee, but I believe the NRC's track record is a good one in providing information to the Senators.

Monica Trauzzi: So the clock is ticking a bit here. McFarlane's term ends at the end of this month. From a practical standpoint, what does it mean for the Commission if they don't meet that deadline, if a vote doesn't happen by the deadline?

Scott Peterson: Well, obviously, we would prefer that the Commission be operating with all five commissioners, but the Commission will and can continue to operate with just four. Obviously, it's better to have all five in the seats and making decisions as a collegial body, and they have been very good at that for the past year with Allison in the chairman's seat. So we would think that for the betterment of the entire regulatory system, that the Senate would move forward and confirm Allison McFarlane.

Monica Trauzzi: So let's move on and talk about San Onofre. Southern California Edison has announced it will not move to reopen the facility. There is a hit to the region that was being served by this plant, and there's a lot of back and forth right now about who should be paying the costs as a result of this being shuttered. Following the announcement, Chairwoman Boxer said the nuclear plant had a defective redesign and could no longer operate as intended. Was it a responsible move by the utility to move forward in this way?

Scott Peterson: Well, I think it was the only move that they had, given the uncertainty of the process that they were dealing with at the Nuclear Regulatory Commission, a process that wasn't consistent with the Atomic Energy Act in terms of public hearings, was inefficient in terms of decision-making, going from the staff to the Commission to the Atomic Safety and Licensing Board, and back again. And it creates confusion, quite honestly, on the part of other companies that are looking at the same kind of replacement of major components.

Monica Trauzzi: So is this a blame game now? I mean, it's NRC's fault?

Scott Peterson: I think it's a learning game, and we've got look at the process that's in place to make these kind of replacements, such as steam generators. We've been doing that for 25 years under the same process. It's been a good process that's worked well. And now all of a sudden it has hitches in it that are making the process inefficient. Southern California Edison couldn't afford any longer to spend $1 million a day to keep San Onofre operational by replacement power. There's a certain reality that will certainly kick in when the economics of a company are at stake. So the process has to be efficient. I think it behooves the NRC to go back and look at that process and make sure that for future projects, they're done under the system that's in place and they're done efficiently.

Monica Trauzzi: How big of a hit is this to the industry, and is it in some ways a sign of surrender on some of the sticky safety issues that surround nuclear energy?

Scott Peterson: Absolutely not. The nuclear industry will continue to play a vital role in the electricity system for hundreds of millions of people in this country. San Onofre is an unfortunate situation for the consumers of Southern California, who relied on that plant for reliable power, for grid stability particularly in the hot summer months. And it'll be interesting to see how they survive this coming summer. But we believe that nuclear energy certainly has a role to play in this country. San Onofre is a unique situation, to the replacement of those steam generators, but when you look at the prospects of our industry, we're building five reactors today in this country. We just finished a major uprate at, FPL's plant's putting on another 500 megawatts. We're renewing licenses, and we're developing new reactor designs for the future. So we feel very good about nuclear energy's role in the electricity system going forward.

Monica Trauzzi: How big of a chapter, though, is the San Onofre story, and now the conclusion of it, in the nuclear energy storyline? I mean, will we continue to look back at this story?

Scott Peterson: I think we should definitely continue to look forward to the story, and actually drive to a conclusion, because that story can't stop here. We have to look at lessons learned, both on the industry side with steam generator replacements and what was done with the steam generators, and we have been doing that for months and months. But when you look at the fact that the NRC staff said there were no significant hazards in moving forward with that, that they - the company had three independent assessments saying coming back up at 70 percent power for a short period of time and testing those steam generators was the right thing to do, and yet they're closing the plant. It doesn't make any sense when you look at the long-term value of those assets to the grid in Southern California. So this is a - this is a story that hasn't ended yet and shouldn't end yet.

Monica Trauzzi: All right. Other news. Exelon recently announced it will not move forward with plans to expand plants in Pennsylvania and Illinois, and they cited as part of the reason competition from the wind sector. Does this move by Exelon demonstrate your industry's inability to compete in a crowded, expansive energy marketplace?

Scott Peterson: I think it clearly shows that the electricity markets are changing. With the low price of natural gas, with subsidized renewables, both at the federal and the state level, and in some of those markets, the addition of low-priced coal plants, it's changing the dynamic of how you meet electricity demand at the same time that electricity demand is remaining relatively flat. So in the short term, some of those markets are going to be very competitive, and so you don't want to make large capital investments in plants at this time, particularly if your demand is flat, and you don't need additional electricity in those market. So it's a prudent move by Exelon to do that. There's no rush to make those upgrades. So it's really prudent to step back and take a look at what the markets are going to do and what the prices of power are going to be in the next three to five years.

Monica Trauzzi: The nuclear industry has seemingly taken hit after hit recently. What - how are investments looking in your sector? Is it difficult to secure investments?

Scott Peterson: Not at all. When you look at the new projects that we're putting in in Georgia and South Carolina, both projects are getting the financing they need. In fact, they're over-subscribed in the financing as they go into the markets to get financing for building those four AP1000 reactors. So there is a, very much the financial support for the industry. As we're putting new technologies online, we want to make sure there's an equal commitment with a cost-shared program to develop small modular reactors at the Department of Energy and through the appropriations that Congress provides for that program, as another part of moving our industry future. So there is investment happening today. There is still a strong support for nuclear energy, certainly a strong role to play, particularly when you're looking at meeting 28 percent electricity growth by 2040, and doing it in a way that really reduces greenhouse gasses as a whole.

Monica Trauzzi: All right. Scott, we'll end it right there. Thank you for coming on the show. Nice to see you.

Scott Peterson: Thank you, Monica. Really appreciate it.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.